Dr.Vidyaa Hari Iyer vs M/S.Sundaram Finance Limited
- Neutral2020:MHC:4925
Ratio decidendi
The rule this decision rests on
1. A nominee to a bank deposit is a trustee only and does not acquire any beneficial interest in or absolute title to the deposited amount; the nominee holds the amount for the benefit of those legally entitled to it under the law of succession. 2. Once a succession certificate is granted by a competent court under Part X of the Indian Succession Act, it is conclusive as against persons owing the debts specified therein, and those persons are bound to accept and act upon it; the issuing court may direct compliance with the certificate if payment is refused despite its production. 3. Section 45ZA of the Banking Regulation Act, which provides that amounts shall be paid to the nominee, does not operate to override or displace a succession certificate granted by a competent court; when a succession certificate is produced before a bank, the bank must give effect to it notwithstanding the nomination, as the object of the Indian Succession Act must be given primacy and the nominee retains the status of trustee. 4. A claim that a deposit was made as a gift in contemplation of death under Section 191 of the Indian Succession Act, raised for the first time in pleadings long after a succession certificate has been granted, without documentary evidence or prior notice to the bank or the legal heir, is implausible and cannot be presumed from nomination alone; the conduct of the parties in their correspondence—specifically, the absence of any mention of a gift when such a claim would have been material—weighs against the credibility of such a later assertion.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on Delivered on 03~12~2020 11~12~2020
CORAM:
THE HONOURABLE MR.JUSTICE N. SATHISH KUMAR
A.No.2468 of 2020 in O.P.No.953 of 2018
Dr.Vidyaa Hari Iyer ... Applicant
.Vs.
1. M/s.Sundaram Finance Limited, Incorporated under the Indian Companies Act, 1913 and having its registered office at No.21 Pattullos Road, Chennai – 600 002.
2. Mr.Nishanth Ramesh ... Respondents
Prayer: Application filed under Order XIV Rule 8 of O.S. Rules read with Section 151 of CPC for direction directing the first respondent to disburse to the credit of the applicant herein the monies lying in FDR No.D629907 (L936473) together with interest at 18% p.a. from the date of maturity, within a time frame as fixed by this Court. For Applicant : Mr.Mohan for M/s.Vijayalakshmi Rajarathnam
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For respondents : Mr.Suresh – R1
Mr.Arvindh Pandian (SC) for Mr.Karthikeyan Anbazhagan - R2
ORDER
This application has been filed by the applicant to direct the first respondent
to disburse to the credit of the applicant herein the monies lying in FDR
No.D629907 (L936473) together with interest at 18% p.a. from the date of
maturity, within a time frame as fixed by this Court.
2. The contention of the applicant is that after the death of her husband, the
first respondent failed to release the deposit made by her husband on the ground
that the second respondent was the nominee. The applicant has filed an Original
Petition in O.P.No.953 of 2018 for issuance of Succession Certificate. The Court
by an Order dated 26.12.2019 issued the Succession Certificate. Despite the
certificate produced, the first respondent did not release the amount. It is further
alleged by the applicant in the application that her husband had made various
fixed deposits. After the death of her husband, she was driven out of her
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matrimonial home. Her in-laws and other nephews and nieces tried to usurp the
entire amount. Hence, this application has been filed to seeking direction to
release the deposit amount held by her husband.
3. It is the contention of the first respondent that the second respondent is
the nominee, has objected for release of the amount. They have filed an
interpleader suit before the City Civil Court for decision.
4. Whereas the second respondent would contend that the succession
certificate has been obtained without making him as a party. There are 8 writ
petitions pending in respect of other deposits made by the husband of the
applicant, wherein the other relatives have been appointed as nominees. When the
writ petitions are already pending, the succession certificate has been obtained.
Therefore, the same is not binding on them. It is his further contention that the
conduct of the applicant's husband making all other relatives as nominees clearly
proves that he has made gift of the money deposited in the bank to each of his
nephews and nieces. Hence, it is his contention that when the suit filed by the first
respondent is pending, direction cannot be ordered in this application. Only the
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nominee is entitled to receive the money. The right of the applicant has to be
decided only in the suit. Hence, prayed for dismissal of this application.
5. The learned counsel Mr.Mohan, appearing for the applicant submitted
that despite the certificate granted in favour of the applicant, who is the only legal
heir of her husband late Hari, the first respondent has not paid the amount on the
ground that the second respondent is the nominee. It is his contention that once
succession certificate is granted under Chapter X of the Indian Succession Act, the
first respondent has to necessarily pay the deposit amount to the applicant. Hence,
submitted that merely because some writ petitions are pending in respect of other
deposits, the same cannot be a ground to non suit the applicant. It is his further
contention that taking advantage of the fact that the applicant is a widow, the
family members in the matrimonial home tried to grab the money left by her
husband. In fact a suit has also been filed claiming huge damages preventing her
from seeking any redressal. This Court has heavily come down on the plaintiff in
the above suit and dismissed the above suit. All these facts clearly indicate that
only for the purpose of defeating the rights of the applicant, all the measures have
been taken and interpleader suit has also been filed by the first respondent with the
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connivance and collusion with the second respondent. Hence, submitted that she
being the class-I legal heir, she is entitled for release of the amount. In the event
of the second respondent succeeding in the interpleader suit, the applicant offers
her share declared in C.S.No.899 of 2017 as security towards the amount and there
can be charge over her share in the above immovable property. Hence, submitted
that the applicant is entitled to a direction to the first respondent to release the
amount. In support of his contentions, he relied on the following judgments :
Sarbati Devi and another Vs. Usha Devi reported in 1984
(1) SCC 424
Vishin N. Khanchandani Vs. Vidya Lachamandas
Khanchandani reported in 2000 (6) SCC 724
Ram Chander Talwar Vs. Devender Kumar Talwar
reported in 2010 (10) SCC 671
Skahti Yezdan Vs. Jayanand Jayant Salgaonkar reported
in 2016 SCC OnLine Bom 9834
P.Panchali Vs. Tamilnadu Generation and Distribution
Corporation Ltd. reported in 2017 SCC OnLine Mad 9191
Surendra Ranganth (Dr.) Vs. State Bank of India reported
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in 2017 SCC ONLine Mad 27190
Oswal Greetech Ltd. Vs. Pankaj Oswal and others
reported in 2019 SCC OnLine NCLAT 526
Shashikala A.Kisan Awad Vs. Divisional office, Central
Review, Mumbai reported in 2005 SCC OnLine Bom 885
M.Subramanian Vs. The Branch Manager, Canara Bank,
Adambakkam, Chennai – 600 008 in W.P.No.31608 of 2015
Order passed by this Court in A.No.98 of 2019 in
C.S.No.870 of 2017 reported in 2019 (5) CTC 755
6. Whereas Mr.Arvind Pandian, learned Senior Counsel appearing for the
second respondent vehemently contended that the succession certificate has been
obtained without making the second respondent as a party and admittedly there are
8 writ petitions pending as against the other relatives and the petition for
succession certificate has been filed without making the second respondent as a
party. Therefore, in this application, the direction cannot be granted. It is his
further contention that the conduct of the husband of the applicant making various
relatives as nominees in a number of fixed deposits clearly show that in fact he has
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gifted the money to all the relatives. It is his contention that under section 191 of
the Indian Succession Act, a man may dispose, by gift made in contemplation of
death, of any movable property. Hence, he has submitted that once a dispute is
raised as to the right over the money by way of gift, unless the same is decided in
the suit, the money cannot be paid to the applicant herein. Further, under section
145ZA of the Banking Regulations Act, only the nominee is entitled to receive the
deposited amount. At the most the legal heirs have to establish their right in a
civil suit. In respect of his submissions, he has relied upon the following
judgments :
Vishin N. Khanchandani and another Vs. Vidya
Lachmandas Khanchandani and another reported in 2000 (6)
Supreme Court Cases 724
M.Vellaichamy Vs. The District Manager, Virudhunagar
District, Centra Co-operative Bank and others in W.A. (MD)
No.256 of 2013
S.Sampath Vs. The Regional Manager, State Bank of
India and others in W.P.No.26992 of 2017
C.Shanthamma and others Vs. Indian Bank represented
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by its Managing Director and Chief Executive Officer and
others in W.P.No.27411of 2016
Ramesh Kumar Singh Vs. Zonal Manager, Allahabad
Bank reported in 2010 (85) AIC 916
K.Gangadar Reddy and another Vs. Gooty Co-operative
Town Bank Limited rep. by its Secretary and others reported in
2014 (2) ALT 66
Dasari Pullamma Vs. Andhra Bank rep. by its Deputy
General Manager, Zonal Office, Kurnool, Kurnool District and
others reported in 2016 (4) ALT 794
Communist Party of India (Marxist) Vs. United Bank of
India and others reported in 2016 (4) WBLR 87
Gopal Ram Vs. BranchManager, Bank of India, Buzar
Branch, District – Buxar and other of Patna High Court in
Civil Writ Juridistion Case No.1909 of 2014
Rama Chakravarty Vs. Punjab National Bank and
others reported in 1991 (71) Comp case 397
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Employment Officer Vs. Sevarinathan reported in Indian
Law Reports 1985 Karnataka 318
Santhosh Sullere and another Vs. Saroj Sullere reported
in 2012 (3) M.P.L.J. 609
Vasantha Kumari and others Vs. Rani Shantha @
Philomena and others reported in 2015 AIR (Karnataka) 167
Chandrasekharan Nair Vs. Union of India reported in
2007 (1) KLT 1006
Dolly Edelwaize D.Silva Vs. Mrs.Maelakin and others
reported in 1943 AIR (Allahabad) 95
Gara Surppadu and others Vs. Pandranki Rami Naidu
and ohters reported in 1984 AIR (A.P.) 386
Lakshmiammal Vs. Boobalan and others reported in 95
L.W. 182
7. Heard both sides and perused entire materials available on record.
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8. It is not in dispute that the succession certificate has been granted by this
Court for releasing the amount lying as a deposit with the first respondent. The
succession certificate has been granted after effecting paper publication etc.
Several writ petitions being Nos.24061 of 2018 to 24066 of 2018, 14304 of 2020
14369 of 2020 have been filed by the applicant against various banks, namely
Axis Bank, Punjab National Bank, City Union Bank, Indian Overseas Bank,
Tamilnadu Power Finance and Infrastructure Development Corporation Limited,
Canara Bank and Indian Overseas Bank respectively and also against the other
relatives, namely other nominees, nephews and nieces of the applicant's husband.
The allegations and counter allegations in the above writ petitions clearly indicate
that the contesting respondents in the above writ petitions were made nominees by
her husband. The counter has been filed only on 14.10.2020 by the respondents in
the above writ petitions, much after the succession certificate has been granted by
this Court. In the counter affidavit, it is stated that they have been nominated by
the husband of the applicant with an intention to give money to the nominees
therein by way of gift and monies were given to them. Such stand has been taken
in the counter filed on 14.10.2020. It is also relevant to note that a suit in
C.S.No.870 of 2017 on the file of this Court was filed for damages as against the
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applicant herein by Metallic Bellows India Pvt. Ltd. [reported in 2019 (5) CTC
755]. While rejecting the above suit, this Court in para 48 has observed that the
very suit has been filed to scuttle the defendant/applicant herein from seeking
remedy under law to indicate her rights and prevent them from speaking up to
their rights or approaching the authorities seeking redressal. The finding recorded
by the learned Single Judge of this Court indicate that the entire family members
joined in one hand to defeat the legal right of the defendant therein.
9. Be that as it may. Now the crux of the matter is that whether the
direction can be issued to the first respondent to pay the fixed deposit amount
lying with them. It is to be noted that the second respondent was appointed as a
nominee in the said fixed deposit. It is well settled position of law that the
nominee is only a trustee. In the judgment in Sarbati Devi and another Vs. Usha
Devi reported in 1984 (1) SCC 424, the Apex Court has held that mere
nomination made under section 39 of the Life Insurance Act does not have the
effect of conferring on the nominee any beneficial interest in the amount payable
under the life insurance policy on the death of the assured. The nominee cannot be
considered as equivalent to an heir or legatee. In Ram Chander Talwar and
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another Vs. Devender Kumar Talwar and others reported in 2010 (10)
Supreme Court Cases 671, it has been held that nomination merely gives right of
the depositor to receive money lying in the account. But it does not make nominee
owner of money lying in the account. The Division Bench of Bombay High Court
in Ahakti Yezdani Vs. Jeyanand Jayant Salgonkar reported in 2016 SCC
Online Bom 9834 has held that nomination does not over ride law in relation to
testamentary or intestate succession and provisions regarding nomination are made
with a view to ensure that estate or rights of deceased subject matter are protected
till legal representatives of deceased take appropriate steps.
10. In the judgment in Shashikala A Kisan Awad Vs. Divisional Office,
Central Railway, Mumbai reported in 2005 SCC Online Bom 885, the learned
Single Judge of Bombay High Court has held that once a succession certificate is
issued by a testamentary Court, the Union of India is bound to accept the same and
on non acceptance of the same, the testamentary Court, who has issued the
succession certificate is entitled to issue a direction to accept such a succession
certificate and the consequence must follow accordingly. In the above case,
despite the succession certificate granted by the Bombay High Court, the railway
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authority has not released the amount. Hence, the Court has directed to release of
the amount. In Vishin N. Khanchandani and another Vs. Vidya Lachmandas
Khanchandani and another reported in 2000 (6) Supreme Court Cases 724, the
Apex Court has held as follows :
“The submission made on behalf of the appellants has no
substance in view of sub-section (2) of Section 8 and the Statement
of Objects and Reasons necessitating the passing of the Act. Sub-
section (1) of Section 8 provides that if any payment is made in
accordance with the provisions of the Act to a nominee, the same
shall be a full discharge from all further liabilities in respect of the
sum so paid. Section 7 of the Act provides that after the death of the
holder of the savings certificates payment of the sum shall be made
to the nominee, if any, and sub-section (1) of Section 8 declares that
such payment shall be a full discharge from all further liabilities in
respect of the sum so paid. However, sub-section (2) of Section
8 specifies that the payment made to the nominee under sub-section
(1) shall not preclude any executor or administrator or the legal
representative of the deceased holder of a savings certificate from
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recovering from the person receiving the same under Section 7; the
amount remaining in nominee's hand after deducting the amount of
all debts or other demands lawfully paid or discharged by him in due
course of administration. In other words though the nominee of the
national savings certificates has a right to be paid the sum due on
such savings certificates after the death of the holder, yet he retains
the said amount for the benefit of the persons who are entitled to it
under the law of succession applicable in the case, however, subject
to the exception of deductions mentioned in the sub-section.”
11. In the judgment of the Division Bench of this Court in
Mr.Vellaichamy Vs. the District Manager, Virudhunagar District Central Co-
operative Bank and others in W.A. (MD) No.256 of 2013, relied on by the
second respondent, it has been held that a nominee is a custodian and the money
that may be received by the nominee should be kept for the interest of others, who
are otherwise legally entitled to and the nominee cannot claim ownership in the
money lying in the account. The Single Judge of this Court in S.Sampath Vs. the
Regional Manager, State Bank of India in W.P.No.26992 of 2017 has held that
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When there is nomination as per section 45ZA of Banking Regulation Act 1949,
the bank has to release the amount to the nominee and allowed the writ petition. Similar view has been taken by the Telangana and Andhra Pradesh High Court in
Dasari Pullamma Vs. Andhra Bank, rep. by its Deputy General Manager,
Zonal Office, Kurnool, Kurnool District and two others reported in 2017 (1)
BankJ 284 and by the Calcutta High Court in Communist Party of India
(Marxist) Vs. United Bank of India and others reported in 2016 (4) WBLR 87.
12. In the judgment in Rama Chakravarty Vs. Punjab National Bank
and others reported in 1991 (1) Cal. L.T. 324, the Calcutta High Court directed
the bank to release the amount on the basis of the deposit. These cases will not
help the respondent in any manner. Since in the above cases, the bank insisted for
succession certificate in favour of the nominee, in such situation, the Court held
that as long there is nomination, the bank is bound to release the amount to the
nominee under section 45ZA of the Banking Regulation Act. The respondent
also placed reliance on judgment of the Karnataka High Court in Employment
Officer Vs. Sevarinathan reported in Indian Law Reports 1985 318, wherein
the succession certificate is sought to be enforced under Order 21 C.P.C and the
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Karnataka High Court has held that succession certificate cannot be enforced since
it is not a decree or Order within the meaning of the Civil Procedure Code. In the
judgment of the Division Bench of Kerala High Court relied upon by the second
respondent in Chandrasekharan Nair Vs. Union of India reported in 2007 (1)
KHC 738, it has been held that the gift in contemplation of death made towards
Chief Minister's Relief Fund is valid under section 191 of the Banking Regulation
Act. There cannot be dispute at all with regard to the above aspect. Merely
making such submissions at a later point of time without any proof. Such
contention of the alleged gift is improbable and unbelievable and the gift cannot
be presumed merely on the basis of some nomination.
13. Similarly the judgment of the Allahabad High Court in the judgment in
Gara Surppadu and others Vs. Pandranki Rami Naidu and others reported in
1984 AIR (A.P.) 386 also relied on by the second respondent to contend that gift
is permissible. Absolutely there is no dispute over the gift under section 191 of
the Indian Succession Act and the competence of the person to make a gift as per
the provision of law. The other judgment relied upon by the second respondent in
Lakshmiammal Vs. Boobalan and others reported in 1995 Law Weekly 182 to
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contend that a direction cannot be issued in the Original Petition to release the
fund. The facts of the above case is totally different wherein in the above case
after the release of the amount on the basis of the succession certificate after 11
years, a petition was filed invoking inherent powers of the Court by the third
parties and strangers for a direction to invoke the succession certificate granted by
this Court and to redeposit the amount. In such a situation, this Court had held
that no direction can be granted. The facts of the above judgment is not applicable
to the facts of the present case.
14. During the submissions, when this Court posed a question when the
alleged oral gift has been made, the learned counsel appearing for the second
respondent is unable to give any details. Though such stand had been taken in the
counter filed at a later point of time on 04.10.2020, on perusal of records,
particularly, the letter correspondences between the parties, namely the second
respondent and the first respondent Sundaram Finance, in the letter dated
20.08.2017 issued by the second respondent to the Sundaram Finance, he never
whispered anything about the gift made by late Hari. The above letter also
indicate that the original fixed deposit receipt is with the legal heir Mrs.Vidyaa
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Hari and therefore, he is unable to close the deposit. If really the gift as contended
by the second respondent is valid and true, the original deposit must be in the
hands of the second respondent to believe the same. What is required to constitute
a valid gift of a immovable property is delivery. Even under section 191, the gift
is said to be made in contemplation of death, of any movable property which he
could dispose of by Will. If really, late Hari in contemplation of death made the
gift of cash, there was no necessity to deposit the money in his name, restricting
the right of the second respondent as only a nominee. Therefore, the alleged gift
pleaded at a later point of time, that too after the succession certificate was
obtained is highly improbable. Such a conclusion is further fortified by very
conduct of the second respondent. After this Court had granted succession
certificate on 26.02.2019, even in the letter dated 19.03.2019, the second
respondent has reiterated the fact that the original deposit receipt is not with him.
15. After a copy of the succession certificate is sent to the first respondent,
the Sundaram Finance has addressed a letter to the applicant herein admitting the
legal position and requested her to furnish certain documents to pay the entire
amount. Similarly, they have also addressed a letter to the second respondent
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indicating the legal position of nominees versus successor to the estate of the
deceased and categorically said that the right of a legal heir cannot be usurped by
the nominee, since the nomination can neither displace the laws of succession nor
substitute a Will and relying on the judgment of the Division Bench of the
Bombay High Court, the Sundaram Finance has categorically stated in the letter
addressed to the second respondent that nominee does not obtain any absolute title
to the property. Thereafter, though a reply was sent by the second respondent on
15.05.2019, in the above letter the contention raised by the second respondent was
to the effect that the succession certificate was obtained without impleading him
and further he has reiterated his right to receive the fixed deposit only as per the
Section 45ZA of the Banking Regulation Act and again requested the first
respondent to release the amount to him as a nominee. This letter is more relevant
to appreciate the contention of the parties. In the above letter sent on 15.05.2019,
there is no whisper as to the oral gift of the so called money as pleaded
subsequently in the counter dated 04.10.2020 in the writ petitions. If really there
was a oral gift or gift as per Section 191 of the Indian Succession Act what should
have been conduct of the parties. At the very inception itself he should have
informed the same to the bank or to the first respondent at the earliest point of
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time.
16. In none of the correspondences, the second respondent ever whispered
anything about the so called gift as per Section 191 of the India Succession Act.
Therefore, the theory of the alleged gift appears to the nothing but after thought
and introduced at later point of time. The conduct of the first respondent
Sundaram Finance having fully agreed the legal position and informing the same
to the second respondent, that too after the succession certificate has been
obtained by the legal heir and again going for interpleader suit is highly
deprecated. It is to be noted that as per Part X of the Indian Succession Act once
succession certificate has been granted, such certificate is conclusive as against the
persons owing such debts. Section 381of the Indian Succession Act reads as
follows :
“Section 381. Effect of certificate – Subject to the provision
of this Part, the certificate of the District Judge shall, with respect to
the debts and securities specified therein, be conclusive as against
the persons owing such debts or liable on such securities, and shall,
notwithstanding any contravention of section 370, or other defect,
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afford full indemnity to all such persons as regards all payments
made, or dealings had, in good faith in respect of such debts or
securities to or with the person to whom the certificate was
granted.”
The above section makes it very clear that the succession certificate is conclusive
as against the persons owing such debts and it makes it clear that there will be
indemnity to all such persons with regard to the payments on the basis of the
succession certificate.
17. As far as Section 45ZA of the Banking Regulation Act is concerned, the
above section indicate that the amount shall be paid to the nominee. It is also to
be noted that Section 45ZD makes it clear that when there is an Order or a
certificate or other authority from a Court obtained relating to such article is
produced before the bank, the bank shall take due note of such decree, Order,
certificate or other authority. Therefore, it cannot be said that even after the
succession certificate is granted by the competent Court is produced before the
bank, they cannot ignore the same merely on the basis of Section 45ZA of the
Banking Regulations Act. Even though 45ZA contained non obstante clause, the
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Apex Court in Vishin N. Khanchandani Vs. Vidya Lachamandas
Khanchandani reported in 2000 (6) SCC 724 in para 11 has categorically held
that though the over riding effect of non obstante clause to attract the applicability
of the phrase, the whole of the section, the scheme of the Act and the objects and
reasons for which such an enactment is made have to kept in mind, as the nominee
has to be treated as a trustee and he is entitled to receive the amount only and he
has to pay the amount to the persons who are entitled under law of succession.
Therefore, when the succession certificate already granted, the object of the Indian
Succession Act has to be given importance. Accordingly, the contention that only
the nominee alone as per section 45ZA of the Banking Regulations Act is entitled
to receive the money even after succession certificate is granted, cannot be
countenanced. Therefore, merely because a suit has been filed at a later point of
time at the instance of the nominee, despite the succession certificate has been
produced, the same has no relevance to decide this application. If at all the second
respondent in the event of succeeding in the suit in O.S.No.5683 of 2019, to
realise the amount, this Court is of the view that some security has to be offered by
the applicant herein. The learned counsel for the applicant Mr.Mohan submitted
that in C.S.No.899 of 2017 already 1/4th share of the applicant has been declared
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and preliminary decree is already passed and charge may be created in respect of
the above 1/4th share of the applicant towards the deposit amount till the
interpleader suit is decided.
18. Accordingly, the first respondent is directed to release the amount to the
applicant within a period of one week from the date of receipt of a copy of this
Order. There shall be a charge over the 1/4th share of the applicant declared in
C.S.No.899 of 2017 towards the deposit amount till the interpleader suit in
O.S.No.5653 of 2019 on the file of the XVI Additional City Civil Court is
decided.
11.12.2020
vrc
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N. SATHISH KUMAR, J.
vrc
Order in:
A.No.2468 of 2020 in O.P.No.953 of 2018
11.12.2020
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